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Poverty in the United States

Indiana has the third-lowest poverty rate in the nation, according to the
U.S. Census Bureau (see Figure 1). On average, 8.3% of Indiana residents lived
in poverty between 1997 and 1999. Nationally, poverty afflicts 12.6% of the
population, or 34.4 million people. Imagine—34.4 million equals the entire
population of Indiana times six, and they all live in poverty. Yet current
poverty rates are the lowest since the late 1970s, even when broken down by
age or race and ethnicity.

Click on map below to see larger version with data.

Unfortunately, lower poverty rates do not necessarily mean that fewer people
are in poverty relative to the past. The rate is only a percentage of the
total population, which has grown since the 1970s. For example, in 1980, 12.6%
of the population would have equaled 28.5 million people compared to today's
34.4 million because the U.S. population has grown by 46.2 million since 1980.
So while the proportion of the population in poverty may be the same, 5.9
million more people—approximately the population of Indiana—live
in poverty today than in 1980 had the rate then been 12.6%.

Looking closer to home, Indiana has the fewest number of people in poverty
compared to its surrounding states (see Figure 2).

With a poverty rate of 8.3%, there are 490,000 Hoosiers living in poverty
(see Table 1 and Figure 3). Kentucky has the largest percentage of impoverished
residents (13.8%), while Ohio has the highest number of individuals living
in poverty (1.2 million).

Poverty levels by state are often used to distribute federal funding for
programs such as the Children's Health Insurance Program (CHIP), Head Start
and the National School Lunch Program. Workforce-development funding and Community
Development Block Grant allocations are also influenced by state poverty rates.
These programs are far more effective at redistributing our nation's wealth
than changes to our tax structure, according to the Census Bureau's June report
on income distribution.

Defining poverty

Individuals and families are considered impoverished if their pre-tax income
falls below the U.S. Census Bureau's poverty thresholds. The thresholds are
based on two variables resulting from past research done by the U.S. Department
of Agriculture:

the cost of the "economy food plan," which provided a nutritionally
adequate diet for the least amount of money, and

evidence that a family of three or more persons spends approximately
one-third of their income on food.

Thus, to survive, a family of three would need an income of at least three
times the cost of the economy food plan. The result is then adjusted by household
size and the number of children in the household. In 1963, when this poverty
measure was developed, the threshold for a family of four was $3,128. Today,
that same family would need an income of more than $17,029 to be considered
above the poverty line (see Table 2).

It is generally accepted that this methodology underestimates the level
of poverty in the United States. At the same time, it does not show the impact
of taxes and public assistance on family income or regional differences in
the cost of living. Although improvements of this measure are regularly under
consideration, there is no hope that a new measure will make poverty vanish.